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In the 1990s, several reforms to Medicare physician fees were implemented to help control spending growth in the traditional Medicare program, known as fee-for-service (FFS) Medicare. Concerns were raised that these reforms might have a negative impact on Medicare beneficiaries' access to physician services, but at the end of the decade, there was little or no evidence of nationwide access problems. In 2002, access concerns were again raised when Medicare physician fees were reduced 5.4 percent. Some policymakers have questioned whether access to physician services may have diminished either nationwide, in certain geographic areas, or for certain beneficiaries needing high-cost services. In October 2003, we briefed the Senate Finance Committee on trends from 2000 to 2002 in (1) Medicare beneficiaries' use of physician services, an indicator of access to these services, and (2) physicians' decisions to "accept assignment," that is, accept Medicare's fee as payment in full. This report addresses the same two objectives and expands on the information provided in our October 2003 briefing.

Two indicators of beneficiary access to physician services--the percentage of beneficiaries who received services and the number of services provided to beneficiaries who were treated, including the number of office visits--suggest an increase in access from April 2000 to April 2002. These indicators also suggest that access increases occurred in virtually all parts of the country--both urban and rural areas. Nationally, the percentage of beneficiaries that received physician services during the month of April rose from 42.0 percent in 2000 to 46.0 percent in 2002. Although the percentage of beneficiaries who received physician services was generally lower in rural areas (39.7 percent in 2000) relative to urban areas (42.9 percent in 2000), the increase from 2000 to 2002 was somewhat higher in rural areas (4.3 percentage points) relative to urban areas (3.8 percentage points). Over the 2-year period, the percentage of beneficiaries receiving physician services increased in the rural areas and the urban areas of every state in the nation. On average, the number of services provided per 1,000 beneficiaries who saw a physician rose by 322 (from 3,619 to 3,941) in urban areas and by 251 (from 3,278 to 3,529) in rural areas from April 2000 to April 2002. All rural and urban areas, except rural Alaska, exhibited an increase in this indicator. The average number of office visits--an indicator of beneficiaries' access to the typical entry point into the health care system and the most basic level of physician services--rose for Medicare FFS beneficiaries. The average number of office visits for both new and established patients per 1,000 Medicare FFS beneficiaries rose by 68 in rural areas (from 399 to 467) and by 79 in urban areas (from 453 to 532) from April 2000 to April 2002. The vast majority--95.6 percent in April 2002--of services were performed by participating physicians, that is, physicians who submit claims on assignment. This represents a 0.6 percentage point increase in the share of services performed by participating physicians since 2000. Nonparticipating physicians performed a commensurately smaller percentage of services. This suggests that physicians did not attempt to compensate for the 2002 fee reduction by changing their decision to accept assignment in order to balance bill patients. From April 2000 to April 2002, the percentage of services that physicians submitted as unassigned claims--the only claims for which physicians are permitted to balance bill beneficiaries--fell from 1.7 percent to 1.3 percent. In short, from 2000 to 2002, Medicare beneficiaries were less likely to be exposed to balanced billing.